When the story broke, few could believe: Microsoft stealing from a startup? Then it became apparent that a third party vendor was probably to blame.

Microsoft has just released the following statement that sets the whole thing to rest. Take a look:

On Monday, December 14, questions arose over a beta application called Juku developed by a Chinese vendor for our MSN China joint venture. We immediately worked with our MSN China joint venture to investigate the situation.

The vendor has now acknowledged that a portion of the code they provided was indeed copied. This was in clear violation of the vendor’s contract with the MSN China joint venture, and equally inconsistent with Microsoft’s policies respecting intellectual property.

When we hire an outside company to do development work, our practice is to include strong language in our contract that clearly states the company must provide work that does not infringe the intellectual property rights of others. We are a company that respects intellectual property and it was never our intent to have a site that was not respectful of the work that others in the industry have done.

We will be suspending access to the Juku beta indefinitely.

We are obviously very disappointed, but we assume responsibility for this situation. We apologize to Plurk and we will be reaching out to them directly to explain what happened and the steps we have taken to resolve the situation.

In the wake of this incident, Microsoft and our MSN China joint venture will be taking a look at our practices around applications code provided by third-party vendors.

In a recent comment discussion a Microsoft employee, I asked for just that: our vendor blew it, we do take the blame, and are quite sorry. Points for being classy Microsoft.